Forex should be opened up to clean it up, says Chi-X’s Fildes

Chi-X chief executive John Fildes has called for the big four banks to open up the clearing for foreign exchange markets to other exchanges, saying it would make the market easier to regulate and less murky.

“I think we’ve seen with the Libor fixing scandal and now FX fixing scandal there are some pretty murky things going on in these markets," Mr Fildes said in an interview with the Nine Network’s Financial Review Sunday. “And to give people confidence in these markets, the best avenue is to have them traded on lit platforms."

“We’re talking about a massive market – $5 trillion a day is traded," he said. “And 50 per cent of that is traded by just four banks alone. But the key is the clearing system because all fx generally is traded through a platform called CLS and that is owned by the banks.

Chi-X chief executive John Fildes: “There are some pretty murky things going on in these markets.”
AFR

“Ordinarily, you would think a market like this, it would be possible to trade in a lit market, in the same way that it is possible to trade equities on Chi-X in Australia, or the New York or London stock exchanges.

“The problem is, to clear it you have to have access to CLS and every attempt so far by regulated exchange owned clearing houses to access clearing houses has been rebuffed by those banks that own the platform. Obviously those banks are keen to keep fx as an OTC [over the counter] market and preserve the profits they make in that market."